Governors urge residents to cut electrical usage

STEVE LAWRENCEAssociated Press

Published Sunday, January 14, 2001

SACRAMENTO, Calif. -- A state agency already has spent roughly $30 million buying electricity to stave off rolling blackouts during the state's power shortage and the state plans to continue its purchases as a long-term solution.

The action comes as West Coast governors urge their residents to cut electricity use by as much as 10 percent while federal, state and corporate officials try to solve the problem.

The secretaries of the U.S. Energy and Treasury departments planned to hold a video conference Saturday with the chief executives of California's two largest utilities and several state officials to discuss solutions to the state's electricity crisis.

They were likely to agree that California should enter into long-term contracts with electricity wholesalers and resell the power to utilities, said Steve Maviglio, a spokesman for Gov. Gray Davis.

The length and price of the contracts still need to be negotiated.

The state Department of Water Resources already has spent roughly $30 million buying electricity over the past month.

That included purchases of about 24,000 megawatt hours of electricity on Thursday and Friday, Carl Torgersen, the department's chief of utility operations, said Saturday. The department acted under authority of emergency orders by U.S. Energy Secretary Bill Richardson.

It was a groundbreaking move by the department.

''(This) is something we've never done before,'' Torgersen said. ''We're in a new era with deregulation.''

Wholesale power prices have increased fivefold in California since last summer, accompanied by a series of drops in the state's power reserves due partly to power plants being down for maintenance.

On Thursday, power reserves in California dipped below 2 percent after a storm cut production at a key nuclear power plant.

The Independent System Operator, which manages most of the state's power grid, said electricity supplies had rebounded from the Stage 3 emergency by Friday but were still tight.

Davis and Govs. John Kitzhaber of Oregon and Gary Locke of Washington said Friday that they would urge their residents to cut electricity demand 7 to 10 percent, try to reduce power use by their state governments by at least 10 percent, and look into joining forces to buy energy-efficient products for state and local agencies to get through the crisis.

Davis and California's two largest investor-owned utilities have pointed fingers at energy wholesalers, saying they have exacerbated the crisis by taking advantage of the tight supplies for their own profit.

Pacific Gas & Electric Co. and Southern California Edison say they have lost more than $9 billion because of wholesale price increases and the state's 1996 deregulation law that froze rate hikes.

The utilities, which won permission to raise rates, said the temporary increases approved by the Public Utilities Commission weren't enough and have warned they could go bankrupt if something isn't done.

Davis, Kitzhaber and Locke said in a written statement that the Federal Energy Regulatory Commission should impose immediate wholesale price controls.

''The federal government must take up its responsibility to prevent the chaos that threatens to engulf the entire western electricity system,'' the governors said.

Sen. Dianne Feinstein, D-Calif., said she would propose legislation to give the U.S. energy secretary authority to cap skyrocketing wholesale electricity prices in 11 western states. It would let the secretary impose a temporary wholesale price cap if there is ''unjust pricing'' and would remain in effect until prices stabilized, said Howard Gantman, the senator's spokesman.

''We think people will listen to this,'' Gantman said. ''People in other states are realizing that how California goes, so goes the West.''

Davis released a letter Friday spelling out how California would cut electricity use during peak periods by at least 5 percent by Tuesday.

Among the steps: shutting off lights and ventilation systems in state buildings after work hours, interrupting pumping by the State Water Project and an aggressive campaign to get the public to reduce electricity use.